Royal Bank (RY.TO)

She wanted to choose a bank, to show that she likes the banking sector. This has pulled back from the beginning of the year. All the banks had a great year last year, so she doesn’t expect returns of 25%-26%. They have about 25% exposure to the US, and she thinks the US economy is going to grow faster than the Canadian. Acquired City National which focused on high net individuals and commercial loans. Dividend yield of 3.7%. (Analysts’ price target is $101.)

Owning Canadian bank stocks has never really hurt. In years when stock performance is weak, you tend to get a little bit of a dividend, so you get paid while you wait.

(A Top Pick Dec 9/16. Up 31.11%.) Long term January call. This was just a way to leverage a position, and this is still good till next January.

Sell or hold? The entire Canadian banking sector has moved up. Some of them are a little cheaper than others, but you are not going to get any compelling buy comparable to this bank. If you are a longer-term investor, this is fine.

Toronto Dominion (TD-T) or Royal (RY-T)? The benchmark in Canada. The most diversified and dominant in almost every area they participate in. From a price point of view, he thinks this one is a little more preferable. There is not much to differentiate between the 2 yields. This would be his preferred holding. (See Top Picks.)

A North American bank? He would suggest Bank of America (BAC-N) for a US name, and if you want a Canadian name, then he would suggest the Royal Bank (RY-T).

(A Top Pick March 10/16. Up 37%.) The banks as a group have done very well. At that time, there was a question about the Canadian economy going into a recession and concerns about housing. The valuation had contracted substantially below their historical averages, as well as having concerns about the energy patch. Her target one year out is about 7%-8% from here, not a bad share price appreciation with a yield of 3.5%. Still a buy. (See Top Picks.)

The growth prospects for this bank are positive, however the prospects for the stock for the next 6 months is probably due for a “breather”. Valuation is at 13.5X this year’s expected earnings. Between 2003 and 2007 all the banks typically traded at between 12X earnings and 13.5X. Between 2003 and 2007 we had a much more vibrant housing situation in Canada. He would typically Buy when a Bank was trading at 12X, and Sell back at 13.5X.

Royal Bank (RY-T) or Manulife (MFC-T)? This one definitely looks a little better. Chart shows it had a major break out in 2016, and he thinks it is going higher.

Had a great quarter. All the banks are likely to come out with fairly reasonable earnings over the next couple of days. They are going to benefit from a rising interest rate environment. Security prices are a lot higher, so capital markets are doing a lot better. Dividend increases continue and he sees that continuing. (See Top Picks.)

Stock split? There is nothing out there that says they are going to do a split, but historically, when their stock becomes very pricey i.e. over $100, they tend to do a split. We are starting to see a lot of bank stocks getting to the $100 type level. It makes it easier for investors to buy stocks, but they are still buying the same stock.

All Canadian banks had a great run. It has been well warranted, because the credit concerns that had been present because of Alberta, haven’t materialized. One of the better positioned Canadian banks on the resurgence of the capital markets. Feels their intrinsic value is not as high as most people think, and the quality of their underlying earnings is not as high as those of the more securing banks that are focused on consumer activity. However, this is poised to have a good year. If the US economy continues to deliver as it has, this is probably going to be one of the better banks. He is a bit cautious on the overall banking sector because they have had a tremendous run up and Price to Book has really increased.

The banks have been on fire and everything has been working for them – oil, housing, etc. They come out with earnings tomorrow. It is trading into expectations for that. The seasonal period is until mid-Apr. Until it breaks some sort of level you should hold on to it.

This is not at the top of his list. They’ve tried to move into the US to a degree, but are a little behind. TD (TD-T) has probably got the best footprint in the US if you want to run with the US banking system. With the Dodd-Frank act coming off the table, he thinks US banks will do better than the Canadians. However, the Royal is one of the biggest banks and the safest.

A well-run bank. All the banks have had a very good run since the US election, but are all looking a little pricey. However, with a long-term view, the banks will continue to do well. This is the leader in many respects. Thinks the wealth management side will have some margin pressures this year, as their investment advisors have to start disclosing how much they are charging their clients in terms of fees. Investment banking is under pressure. The M&A advisory business is getting very competitive. Americans are starting to come up here more often. The bank has a big business in the US, which is doing very well. On the lending side, he doesn’t think Canadian banks can continue to pile on debt on to Canadian consumers like they have in the last 20 years. Dividend yield of about 3.3%. Thinks this could correct back down to the low $80s in a nasty market.